Partial transcript of the testimony of Camille Olson, Partner at Seyfarth Shaw and Representative of the U.S. Chamber of Commerce, on the Paycheck Fairness Act. The Senate Committee on Health, Education, Labor and Pensions hearing was held on April 1, 2014:

Good afternoon, and thank you Chair Mikulski, Ranking Member Alexander, and other members of the committee.

My name is Camille Olson, and I’m testifying on behalf of the U.S. Chamber of Commerce.

I chaired the Chamber’s Equal Employment Opportunity Policy Subcommittee, and I also chair my law firm’s national complex discrimination litigation practice group.

However, for all the reasons set forth in my written testimony, the Chamber strongly opposes the Paycheck Fairness Act because it doesn’t promote equal pay for equal work.

If passed, the act would amend the Equal Pay Act significantly in the following substantive and procedural ways.

One, it would impose harsher lottery type penalties of unlimited compensatory and punitive damages upon all employers regardless of size and without a showing of intentional sex discrimination – different from every other employment discrimination law in this country.

It would effectively eliminate the factor other than sex defense, and it would provide a more attorney-friendly class action device among other amendments.

The act’s proponents contend that these changes are necessary to ensure equal pay for women, but nothing could be further from the truth because existing laws already provide robust opportunities to challenge discriminatory pay practices as well as significant remedies to protect employees against gender-based pay discrimination under both the Equal Pay Act, Title VII, and Executive Order 11246.

Today, the Equal Pay Act and Title VII provide favorable and effective remedies for pay discrimination. Those include back pay, injunctive relief in the form of increased pay, liquidated or double damages, attorney’s fees, costs, pre-judgment interests, and up to $300,000 in compensatory and punitive damages per employee.

And if an employer is a government contractor, as many are, it may also face sanctions and other remedies if it discriminates in its pay practices.

Today’s federal court docket and EEOC charge and settlement statistics confirm that aggrieved victims are taking advantage of these multiple forms of redress currently available to remedy pay discrimination in both single plaintiffs as well as class and collective actions across the country as well as by raising claims with both the EEOC and the OFCCP.

Despite these protections, the act’s proponents proposed drastic changes that would transform the Equal Pay Act beyond recognition all upon an unsubstantiated premise that any differences in wages between men and women are the result of employer discrimination.

Most concerning to the Chamber are the following three issues:

First, by expanding the Equal Pay Act remedies to include unlimited compensatory and punitive damages, the Paycheck Fairness Act ignores that it is a remedial strict liability statute specifically designed to compensate employees for sex-based pay inequities without a showing of discriminatory employer intent. It runs contrary to the entire body of federal anti-discrimination law. The damages conceived and intended to punish and deter wrongdoing would now apply to claims of unintentional conduct prohibited by the Equal Pay Act.

Second, the re-writing of the factor other than sex defense is the most significant substantive change proposed by the Equal Pay Act. The change must be considered in tandem with the Equal Pay Act’s fundamental underpinning, balancing the requirements of equal pay for equal work against the mandate that the government cannot interfere with private company’s valuations of a worker’s qualifications, the work performed, and the setting of pay rates.

Currently, under the Equal Pay Act, an employer defends a claim by showing either a seniority or a merit system or a system measuring quality or quantity of work or a gender-neutral factor other than sex – including for example education, experience, special skills, expertise, and external market conditions – caused the difference.

If the Paycheck Fairness Act becomes law, the employer would be required to prove if there was a showing of any difference in pay that it paid more because of a bonafide factor that was job-related and consistent with business necessity and that the established factor was not derived from a sex-based differential in compensation. Even then, the employer remains liable if a plaintiff can show an alternative employment practice that would serve the same business purpose. This is true even where the employer shows that the factor other than sex justifying the differential in pay is education, training, or experience.

The business necessity standard developed by case law as a disparate impact defense and confirmed as such by the Civil Rights Act of 1991 is fundamentally incompatible with the Equal Pay Act, which the Supreme Court has noted is designed to redress disparate treatment not disparate impact claims. Applying business necessity to the Equal Pay Act, an employer is required to prove for every single wage decision that the ultimate business goal achieved by the higher pay is essential to the business and that the factor is essential to the achievement of that ultimate business goal.

What would be the practical impact of re-defining the factor other than sex defense?

Consider whether employers would still have the freedom to hire and retain the most qualified workforce.

The act discourages employers from offering added compensation for qualifications beyond the minimum required by the job. Employers who are willing to match higher pay offered by a competitor risk liability unless they are able to prove that the outside competitor’s offer is not based upon or derived from a sex-based differential.

Finally, if an employer’s financial ability to round up all employees’ wage rates qualifies as an alternative factor under the Paycheck Fairness Act because it is neither overly costly nor so cost prohibitive it would threaten the survival of the business, then any pay differential under this act would likely automatically require a uniform raise in every single employee in the job regardless of variations in qualifications such as education, training, or experience.

If this is the case, the factor other than sex defense is illusory. It wipes out all pay differences based on qualifications.

I see that I’m over my time. I also wanted to make a note that there were significant comments in my written statement with respect to the concern about revising the class action mechanism that’s in the Equal Pay Act. But I’ll just defer to those comments and in conclusion just say that the Chamber believes that the Paycheck Fairness Act presents serious and dangerous ramifications that far outweigh any protection offered to victims of discrimination. The compounded effects of the act’s most problematic provisions will be to expose private enterprise to unprecedented invasion by the judiciary under threat of unlimited damages as well as subvert the carefully constructed frameworks of existing anti-discrimination law.

For these reasons and the reasons contained in my written testimony, the Chamber has serious concerns with respect to the Paycheck Fairness Act.

Thank you very much for the opportunity to share some of these concerns with you today.